Strategic Interaction Between Monetary and Fiscal Policy in Algeria: a Game Theory Approach

Yıl 2024, , 262 - 280, 31.12.2024

Abderrahim Chibi , Youcef Zahaf , Sidi Mohammed Chekouri

https://doi.org/10.54821/uiecd.1539098

Öz

Using a dynamic game theory framework, this study evaluates the interplay of fiscal and monetary policies under various demand and supply shock scenarios in the Algerian economy. Aligning fiscal and monetary policies is essential to mitigate potential conflicts that may arise from uncoordinated actions, such as increased inflation volatility or unsustainable public debt levels, which ultimately reduce societal welfare. In this context, the game theory-based approach utilized in this study to examine the effectiveness of different coordination methods (Nash equilibrium, Stackelberg leadership, and cooperative solution) between Algerian fiscal policy and monetary policy in a conventional macroeconomic optimization issue. Our computational analysis indicates that the cooperative Pareto equilibrium minimizes welfare loss by offering optimal responses to economic shocks, particularly in terms of output stabilization, debt sustainability, and inflation control. Although this study focuses on Algeria, the findings may provide insights for other developing economies with similar macroeconomic and institutional contexts. This study contributes to the literature by quantitatively assessing the effectiveness of policy coordination strategies through a game theory lens, filling a gap in the analysis of fiscal-monetary interplay in developing economies.

Anahtar Kelimeler

Monetary Policy, Fiscal Policy, Pareto Cooperative Solution, Stackelberg Equilibrium, Nash Equilibrium

Destekleyen Kurum

Not available

Proje Numarası

Not available

Teşekkür

This research was carried out under the aegis of the Directorate General for Scientific Research and Technological Development (DGRSDT), the Algerian Ministry of Higher Education and Scientific Research. We are grateful to Professor Dmitri Blueschke for providing us with the Matlab program code for implementing the empirical study. We would also like to thank the participants of 44th MEEA/ASSA Annual Meeting (San Antonio, TX. USA) for useful suggestions and comments.

Cezayir'de Para ve Maliye Politikası Arasındaki Stratejik Etkileşim: Bir Oyun Teorisi Yaklaşımı

Öz

u çalışma, dinamik oyun teorisi çerçevesini kullanarak Cezayir ekonomisinde çeşitli talep ve arz şoku senaryoları altında maliye ve para politikalarının etkileşimini değerlendirmektedir. Maliye ve para politikalarının uyumlu bir şekilde yürütülmesi, koordinasyonsuz eylemlerden kaynaklanabilecek potansiyel çatışmaları hafifletmek için gereklidir. Bu çatışmalar arasında artan enflasyon dalgalanmaları veya sürdürülemez kamu borcu seviyeleri yer almakta olup, bunlar nihayetinde toplumsal refahı azaltmaktadır. Bu bağlamda, bu çalışma, geleneksel bir makroekonomik optimizasyon sorunu çerçevesinde Cezayir'in maliye ve para politikaları arasındaki farklı koordinasyon yöntemlerinin (Nash dengesi, Stackelberg liderliği ve iş birliği çözümü) etkinliğini incelemek için oyun teorisi temelli bir yaklaşım kullanmaktadır. Yapılan analiz sonucunda, iş birliğine dayalı Pareto dengesinin refah kaybını minimize ederek ekonomik şoklara, özellikle de üretim istikrarı, borç sürdürülebilirliği ve enflasyon kontrolü açısından optimal tepkiler sunduğunu göstermektedir. Bu çalışma her ne kadar Cezayir'e odaklansa da, bulgular benzer makroekonomik ve kurumsal bağlamlara sahip diğer gelişmekte olan ekonomilere yönelik de içgörüler sağlayabilir. Çalışma, maliye-para politikası etkileşiminin oyun teorisi perspektifinden koordinasyon stratejilerinin etkinliğini nicel olarak değerlendirerek, gelişmekte olan ekonomilerde maliye-para ilişkisine yönelik analizlerdeki önemli bir boşluğu doldurmak suretiyle literatüre katkı sağlamaktadır.

Anahtar Kelimeler

Para Politikası, Maliye Politikası, Pareto Kooperatif Çözümü, Stackelberg Dengesi, Nash Dengesi

Proje Numarası

Not available

Kaynakça

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